Where a co-owner of a business dies or becomes disabled, the remaining owners of the business will want exclusive ownership and control of the business, while the beneficiaries of the person’s estate will want the money representing ‘their’ interest in the business. Once appropriate insurance is in place, properly drafted buy sell agreements can provide a simple and cost effective mechanism for achieving all objectives of the business owners.
Buy sell agreements and self owned insurance
What is ‘self ownership’? Each business owner has an insurance policy on their own life.
What are the benefits of implementing a buy sell agreement with self owned Insurance? It is the simplest business succession arrangement as it avoids any possible CGT problems
Buy sell agreements and self owned insurance work together so an outgoing owner (or their estate) receives insurance proceeds upon disablement or death. The outgoing owner (or their estate) then transfers their interest in the business to the remaining owners under the buy sell agreement, therefore providing an overall smooth transfer of ownership.
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